Good Article about ongoing Social Security Funding on Market Watch

[Montecfo]

If one wants to close a crazy loophole are they a tax collector or just trying to correct a crazy loophole? The federal government should not be making and retaining loopholes that benefit the wealthy just because it can.

I understand that the historical reason for stepped up basis was that it was the quid quo pro for the estate tax (not really the inheritance tax as you stated). I would concede that it made sense back when the estate tax exemption was lower. As early as 2000 the exemption was only $675,000 and if it wasn't currently almost $14 million (almost $28 million for a couple) then I probably wouldn't feel so strongly about it.

I generally agree that the family farm or business shouldn't have to be sold just to pay the estate tax, but there are ways to deal with that through permanent life insurance on the principal owners that provide the funds to pay the estate tax and that was done for years when the estate tax exemption was lower/more reasonable. Also, you may have missed in the post that you responded to that I suggested that the tax on the unrealized gains could be made payable over 5 or 10 years. That was suggested specifically so the family farm or business would not need to be sold to pay the estate taxes.

However it make no sense to me that if someone inherits a $2 million traditional IRA that they need to drain it over 10 years and pay the tax on the withdrawals but OTOH if someone inherits a family farm or business with a $2 million unrealized gain that not only does the estate generally not pay estate tax but also they never have to pay tax on that unrealized gain at all.

IMO, it is an obscene inequity in the tax law that does nothing but to benefit the wealthy and should be closed. There will need to be an independent appraisal to set the stepped up basis of the family farm or business under current law and that same independent appraisal can be used to set the value of thec family farm or business. The basis will be known from the business' capital asset and depreciation records.

Well pb4uski it seems we agree on most things. And maybe where we differ is on framework.

The wealth in America is owned by its people. It is not owned by the government which allows people to retain some simply due to largesse.

I don't see the estate tax exemption or stepped up basis as a "loophole". In fact both are fully intended features of the tax law which have been in place for generations.

And it is a bit of a trap to demonize the "wealthy" since we have designed a system where the wealthy tax virtually all of the federal income tax in the US. So all tax cuts "benefit the wealthy" in dollars but have also reduced many folks' federal income tax burden by 100%. Almost 50% pay no income tax (in fact for many their tax rate is negative due to refundable credits). The top 1% of earners pay 40% of the federal income tax. The top 5% which includes many of us here pay 66% (source USAFacts).

Wealth is accumulated in America by risk taking and grit. People work their entire careers to build as much wealth as they can for their family, accepting the burden of paying the nation's federal state and local income taxes along the way. The estate tax should not be taking away that wealth in my view. A reasonable exemption I think is appropriate (currently $14m per person) especially when estate tax rates are so high, escalating quickly to 40% and including previously taxed assets.

And of course anyone who feels they are not paying enough can send a check directly to the US treasury in whatever amount they wish.

The thread drift can sometimes be the most compelling part of a thread but while we have moved far afield from SS but we certainly have not deviated from the world of taxes, a very interesting topic always.

 

[Gumby]

..... Wealth is accumulated in America by risk taking and grit.....

Except when you inherit it. Then it's just a matter of choosing your parents wisely.

 

[Fermion]

Wealth is accumulated in America by risk taking and grit. People work their entire careers to build as much wealth as they can for their family, accepting the burden of paying the nation's federal state and local income taxes along the way. The estate tax should not be taking away that wealth in my view.

Sometimes. One could argue that there is a fair bit of luck and circumstance involved as well.

Let us take an extreme fictional example that may or may not have actually happened. Doug and Jim are both 18. Doug gets drafted for Vietnam, Jim somehow escapes the draft and is in business school. Doug is severely wounded in the conflict and comes back with physical and mental injuries but picks up a job as a maintenance worker at a local factory. Jim finishes business school and works his way up in management at a major corporation. At retirement, Doug has a small amount of saving plus social security, while Jim has amassed over $30 million dollars as VP of xyz division.

Is it fair to say Jim just had more risk taking and grit? Did Jim's ability to make that $30 million depend at all on sacrifices of others?

Giving a decent portion back to the system after you die that enabled you and your spouse to enjoy a very comfortable life and retirement doesn't seem that unfair to me. Having endless silver spoon children and grandchildren while others cannot afford to live because of high housing costs seems more unfair.

 

[GenXguy]

If you lollygagged at a low effort and low income job all your life, how am I responsible for that?

Are you suggesting that someone having a low income job all their life was lollygagging and putting in low effort? I think that would be a pretty narrow view. There are many that struggled and worked long hard hours in a low paying job and eventually forced out because of the toll it took on them. Then you have the other physical and mental health reasons as well, to no fault of these workers. A lot of high income workers don't put in much effort and spend a lot of time out of the office, golfing, taking long vacations, using the internet, etc.

As for being responsible for, I think the same thing about paying for other people's kids and paying for spousal benefits for spouses that didn't pay into SS and/or collected on someone else's benefits.

Then it's just a matter of choosing your parents wisely.

Yes, another factor that so many putting in hard effort didn't have the advantages you might have had. Anyway, let's have some compassion for people, here.

 

[GenXguy]

You seem to have a tendency to want to convert social security to yet another welfare program. Both of these are bad ideas.

Ummm.... Adjusting tax thresholds for inflation, or at least to help close the gap some with inflation, is not "converting to welfare". LOL There are some articles that you should read on this:

This 33-Year-Old Social Security Rule Is Wreaking Havoc on Seniors' Retirement Income | The Motley Fool

If lawmakers addressed this issue, millions of seniors would probably see an immediate boost in their annual income.

www.fool.com

Double Whammy: the Taxation of Social Security Benefits

This week, Gail explains how the government takes away a piece of your Social Security benefits.

www.foxnews.com

https://www.marketwatch.com/story/people-who-saved-for-retirement-are-being-punished-by-social-security-taxes-2019-01-07

There has been legislation proposed before to address it, so apparently some people in much higher places than us think it should be done, also. It makes more sense than more tax cuts for billionaires.

Those with more income in many cases have more income because over their adult lifetimes they have either worked harder and/or made more sacrifices in order to have more income at this stage of life.

No, it is not "either." See my post to gumby.

Please cease and desist with socialist ideas to "improve" social security. While such things were unlikely to be enacted to begin with they are even less likely in today's political environment.

Please stop responding to my posts with this negativity. You can choose to ignore.

 

[pb4uski]

Well pb4uski it seems we agree on most things. And maybe where we differ is on framework.

The wealth in America is owned by its people. It is not owned by the government which allows people to retain some simply due to largesse.

I don't see the estate tax exemption or stepped up basis as a "loophole". In fact both are fully intended features of the tax law which have been in place for generations.

And it is a bit of a trap to demonize the "wealthy" since we have designed a system where the wealthy tax virtually all of the federal income tax in the US. So all tax cuts "benefit the wealthy" in dollars but have also reduced many folks' federal income tax burden by 100%. Almost 50% pay no income tax (in fact for many their tax rate is negative due to refundable credits). The top 1% of earners pay 40% of the federal income tax. The top 5% which includes many of us here pay 66% (source USAFacts).

Wealth is accumulated in America by risk taking and grit. People work their entire careers to build as much wealth as they can for their family, accepting the burden of paying the nation's federal state and local income taxes along the way. The estate tax should not be taking away that wealth in my view. A reasonable exemption I think is appropriate (currently $14m per person) especially when estate tax rates are so high, escalating quickly to 40% and including previously taxed assets.

And of course anyone who feels they are not paying enough can send a check directly to the US treasury in whatever amount they wish.

The thread drift can sometimes be the most compelling part of a thread but while we have moved far afield from SS but we certainly have not deviated from the world of taxes, a very interesting topic always.

Seems like I have hit a nerve with you, Montecfo. Good.

To begin with, thinking that people who inherit wealth should pay taxes on unrealized gains is not demonizing the wealthy in any way shape or form. The taxation of long-term capital gains at preferential tax rates is well established. The fact that most people escape that tax on unrealized gains at death is relatively new and unconscionable. BTW, I have benefitted from stepped-up basis and likely will again in the near future, but if it is wrong, it is wrong.

I don't have any problems with stepped-up basis if the estate tax exemption is reasonable, and almost $14 million per person isn't anywhere near reasonable. That 933 years worth of standard deductions! I would prefer no or a much lower exemption combined with much lower estate tax rates if stepped-up basis is to be retained. Or better yet, an estate tax that is designed as if all the persons assets were sold for fair value at death and gains taxed at 15% along with a stepped up basis for beneficiaries.

IMO it is obscene to retain this huge tax gift to the wealthy of stepped up basis as currently structured when we have $33T national debt and multi-trillion annual deficits.

Or alternatively, change it that if you inherit property that you get the decedent's cost basis as if it was gifted to you which would effectively eliminate this unwarranted tax benefit.

 

[pb4uski]

... No, it is not "either." See my post to gumby. ...

I saw your post to Gumby. To problem is just that you are dead wrong.

Are there some poor seniors who worked hard and lived below their means and had bad luck of some sort like an expensive illness or whatever? Perhaps. But I agree with Gumby that most people in such situations were not industrious enough and/or lived above their means.

Are you familiar with The Little Red Hen?

 

[pb4uski]

....As for being responsible for, I think the same thing about paying for other people's kids and paying for spousal benefits for spouses that didn't pay into SS and/or collected on someone else's benefits.....

The one-trick pony returns!

 

[reneeh63]

Well pb4uski it seems we agree on most things. And maybe where we differ is on framework.

The wealth in America is owned by its people. It is not owned by the government which allows people to retain some simply due to largesse.

I don't see the estate tax exemption or stepped up basis as a "loophole". In fact both are fully intended features of the tax law which have been in place for generations.

And it is a bit of a trap to demonize the "wealthy" since we have designed a system where the wealthy tax virtually all of the federal income tax in the US. So all tax cuts "benefit the wealthy" in dollars but have also reduced many folks' federal income tax burden by 100%. Almost 50% pay no income tax (in fact for many their tax rate is negative due to refundable credits). The top 1% of earners pay 40% of the federal income tax. The top 5% which includes many of us here pay 66% (source USAFacts).

Wealth is accumulated in America by risk taking and grit. People work their entire careers to build as much wealth as they can for their family, accepting the burden of paying the nation's federal state and local income taxes along the way. The estate tax should not be taking away that wealth in my view. A reasonable exemption I think is appropriate (currently $14m per person) especially when estate tax rates are so high, escalating quickly to 40% and including previously taxed assets.

And of course anyone who feels they are not paying enough can send a check directly to the US treasury in whatever amount they wish.

The thread drift can sometimes be the most compelling part of a thread but while we have moved far afield from SS but we certainly have not deviated from the world of taxes, a very interesting topic always.

Sure, let's reward risk-taking...though....isn't inheriting wealth just the opposite of that? Why don't we encourage each generation to work hard by limiting (NOT eliminating) the transfer of wealth? Risk taking AND hard work are what we want to reward - not basking in generational wealth, especially when it builds to point of people with hundreds of millions and hundreds of Billions of dollars.

Also, I'm not wowed by stats like the "top 5% pay 66%" of taxes. OF COURSE they do! Because they have it to pay. I'm all for progressive taxes - the degree to which needs to be carefully evaluated. Let's recall that taxes right now are quite low - no 70% or 90% top tax brackets or anything close to that.

My biggest complaint is being penalized by being single...two can live (almost) as cheaply as one but their tax break is double. I guess I should have chosen better or stuck it out!

 

[HawkOwl]

Except when you inherit it. Then it's just a matter of choosing your parents wisely.

How do you feel about spouses inheriting assets?

 

[youbet]

My biggest complaint is being penalized by being single

It's been fun to watch the pendulum swing on these things. I recall when DW and I married 50-some years ago that our MFJ fed taxes were higher than the sum of our taxes had we remained legally unattached and filed as two singles. I think the construction of the tax tables in those days was referred to as the "Marriage Penalty."

Stick around, it'll likely change again sometime up ahead.

 

[pb4uski]

How do you feel about spouses inheriting assets?

I'm ok with that. I would have it similar to IRAs where a spouse just steps into the shoes of the decedent but the rules are different for non-spouse beneficiaries and that non-spouse beneficiaries have to eventually pay taxes. Actually, the IRA structure, which requires that withdrawals be made and taxes paid within 10 years might be a good conceptual approach.

The objective is to taxed untaxed intergenerational wealth transfers and block the current free ride.

 

[Gumby]

Are you suggesting that someone having a low income job all their life was lollygagging and putting in low effort? I think that would be a pretty narrow view. There are many that struggled and worked long hard hours in a low paying job and eventually forced out because of the toll it took on them. Then you have the other physical and mental health reasons as well, to no fault of these workers. A lot of high income workers don't put in much effort and spend a lot of time out of the office, golfing, taking long vacations, using the internet, etc.

As for being responsible for, I think the same thing about paying for other people's kids and paying for spousal benefits for spouses that didn't pay into SS and/or collected on someone else's benefits.


Yes, another factor that so many putting in hard effort didn't have the advantages you might have had. Anyway, let's have some compassion for people, here.

I'm not suggesting anything. That's why my statement started with the word "if". And I said nothing at all about handicapped people. Finally, you have no idea what "advantages (I) might have had", if any. Or whether I spent my time out of the office golfing.

I'll say it again so it's clear: IF you lollygagged your whole life, had no ambition, and simply would not work, I really feel no obligation to you now. Maybe you did, maybe you didn't; you would have to decide that. But I do know that I did not lollygag and that I tolerated conditions that others would not, which is why I have what I have now. Luck had very little to do with it. Neither did genius, nor any inheritance. Mostly, it was just personal sacrifice and perseverance.

I have long sensed in your posts an anger about your situation in life. I'm sorry, but that's not a good basis for public policy.

 

[Montecfo]

Seems like I have hit a nerve with you, Montecfo. Good.

Nerve hit? No. Good??

Hopefully we are just exchanging ideas and no one getting too personally involved.

To begin with, thinking that people who inherit wealth should pay taxes on unrealized gains is not demonizing the wealthy in any way shape or form. The taxation of long-term capital gains at preferential tax rates is well established. The fact that most people escape that tax on unrealized gains at death is relatively new and unconscionable. BTW, I have benefitted from stepped-up basis and likely will again in the near future, but if it is wrong, it is wrong.

Unconscionable? No.
The idea that the federal government should be able to take wealth from your family just because you died is better described that way as I see it.

I don't have any problems with stepped-up basis if the estate tax exemption is reasonable, and almost $14 million per person isn't anywhere near reasonable. That 933 years worth of standard deductions! I would prefer no or a much lower exemption combined with much lower estate tax rates if stepped-up basis is to be retained. Or better yet, an estate tax that is designed as if all the persons assets were sold for fair value at death and gains taxed at 15% along with a stepped up basis for beneficiaries.

What we haven't established is why you consider it normative for the government to just take accumulated wealth.

IMO it is obscene to retain this huge tax gift to the wealthy of stepped up basis as currently structured when we have $33T national debt and multi-trillion annual deficits.

Let's see: unconscionable first, now obscene. Hmm.

That does describe the national debt. But the levels you cited were not reached for lack of an adequate estate tax. It was because our government has grown expenditures far faster than inflation or population growth. Therein lies the problem.

And if I accept your view then I guess running higher and higher deficits would always justify ever higher taxation. Not buying that.

And it wouldn't stop at estate taxes. Never does

Or alternatively, change it that if you inherit property that you get the decedent's cost basis as if it was gifted to you which would effectively eliminate this unwarranted tax benefit.

I think the way it is set up now is about right.

 

[Montecfo]

Sure, let's reward risk-taking...though....isn't inheriting wealth just the opposite of that? Why don't we encourage each generation to work hard by limiting (NOT eliminating) the transfer of wealth? Risk taking AND hard work are what we want to reward - not basking in generational wealth, especially when it builds to point of people with hundreds of millions and hundreds of Billions of dollars.

Someone took risk. Wealth is usually not accumulated accidently.

And I know you are speaking very generally but the estate tax is not 5% or 10% it is 40%. That's a huge chunk of ones wealth (not income).

Also, I'm not wowed by stats like the "top 5% pay 66%" of taxes. OF COURSE they do! Because they have it to pay. I'm all for progressive taxes - the degree to which needs to be carefully evaluated. Let's recall that taxes right now are quite low - no 70% or 90% top tax brackets or anything close to that.

Well my statement was in response to misleadingly referring to "tax cuts.fof the wealthy" when that is who pays the tax. But these folks are also job creators which our economy needs.

And the higher marginal rates in the past were not as high as they may seem when there were many more deductions.

And does taking 70 or 90% of income seen right? Why would anyone take a risk to give most of the increase to the government?

My biggest complaint is being penalized by being single...two can live (almost) as cheaply as one but their tax break is double. I guess I should have chosen better or stuck it out!

Good public policy reason for that though.

 

[Montecfo]

Sometimes. One could argue that there is a fair bit of luck and circumstance involved as well.

Let us take an extreme fictional example that may or may not have actually happened. Doug and Jim are both 18. Doug gets drafted for Vietnam, Jim somehow escapes the draft and is in business school. Doug is severely wounded in the conflict and comes back with physical and mental injuries but picks up a job as a maintenance worker at a local factory. Jim finishes business school and works his way up in management at a major corporation. At retirement, Doug has a small amount of saving plus social security, while Jim has amassed over $30 million dollars as VP of xyz division.

Is it fair to say Jim just had more risk taking and grit? Did Jim's ability to make that $30 million depend at all on sacrifices of others?

Giving a decent portion back to the system after you die that enabled you and your spouse to enjoy a very comfortable life and retirement doesn't seem that unfair to me. Having endless silver spoon children and grandchildren while others cannot afford to live because of high housing costs seems more unfair.

Well these comparisons are like anecdotes. I think you have to look at data overall to base your conclusions. Disabled war veteran versus "endless silver spoons" as you say. Not especially illustrative I don't think.

But even in your example, Jim will "give back" a huge portion of net worth in estate tax. Not to mention state level and income tax.

To put a fiber point on it, let's note that
as a member of the 1% he and those like him pay 46% of the US personal income tax. Yes, almost half! That's before we even talk about 40 percent rates on federal estate tax ( on wealth, not income) and then state and local income and inheritance taxes.

So Jim is hardly a free rider.

And think how high the tax burden would be on your disabled vet, you I and others if as did not have these folks generating income and paying a huge portion of their worth in taxes

 

[Fermion]

The idea that the federal government should be able to take wealth from your family just because you died is better described that way as I see it.

Your family didn't earn that wealth, you did. You stood on the shoulders of many generations of US citizens who established a country where it was even possible to accumulate such wealth without fear of some cartel or other entity just taking it away with no recourse. Aside from the spouse and possibly the immediate children under age 25, I don't see the problem with returning a portion of that wealth back to the country that enabled your education and protection in the first place.

 

[Montecfo]

Your family didn't earn that wealth, you did. You stood on the shoulders of many generations of US citizens who established a country where it was even possible to accumulate such wealth without fear of some cartel or other entity just taking it away with no recourse. Aside from the spouse and possibly the immediate children under age 25, I don't see the problem with returning a portion of that wealth back to the country that enabled your education and protection in the first place.

I certainly don't disagree with that generally. We have a very robust estate and gift tax regime which does just that.

But when you say "return it to the government", that part is a bit puzzling. The government never owned it.

I suspect maybe not quite what you meant but I think I get it

 

[pb4uski]

... We have a very robust estate and gift tax regime which does just that. ...

False.

 

[anethum]

Someone took risk. Wealth is usually not accumulated accidently.

And I know you are speaking very generally but the estate tax is not 5% or 10% it is 40%. That's a huge chunk of ones wealth (not income).

Well my statement was in response to misleadingly referring to "tax cuts.fof the wealthy" when that is who pays the tax. But these folks are also job creators which our economy needs.

And the higher marginal rates in the past were not as high as they may seem when there were many more deductions.

And does taking 70 or 90% of income seen right? Why would anyone take a risk to give most of the increase to the government?

Good public policy reason for that though.

Bolded by me.

The estate tax is only levied on the part of an estate that's in excess of the absurdly high current exclusion, nearly $14 million. The exclusion amount has increased in recent decades far in excess of the rate of inflation. Furthermore, loopholes allow many exceedingly wealthy folks to avoid inheritance taxes.

US Federal Estate Exclusion Amounts in Recent Years:
Estate exclusion amount in 1981: $175,000
Estate exclusion amount in 2001: $675,000
Estate exclusion amount in 2002: $1,000,000
Estate exclusion amount in 2006: $2,000,000
Estate exclusion amount in 2011: $5,000,000
Estate exclusion amount in 2017: $5,490,000
Estate exclusion amount in 2018: $11,180,000
Estate exclusion amount in 2025: $13,990,000

When money changes hands, it is often taxed. Why should inheritances be an exception?

Excessive concentration of wealth has consistently been proven to cause grave societal problems throughout human history, often resulting in revolutions.

 

[AudiDudi]

Bolded by me.

The estate tax is only levied on the part of an estate that's in excess of the absurdly high current exclusion, nearly $14 million. The exclusion amount has increased in recent decades far in excess of the rate of inflation. Furthermore, loopholes allow many exceedingly wealthy folks to avoid inheritance taxes.

US Federal Estate Exclusion Amounts in Recent Years:
Estate exclusion amount in 1981: $175,000
Estate exclusion amount in 2001: $675,000
Estate exclusion amount in 2002: $1,000,000
Estate exclusion amount in 2006: $2,000,000
Estate exclusion amount in 2011: $5,000,000
Estate exclusion amount in 2017: $5,490,000
Estate exclusion amount in 2018: $11,180,000
Estate exclusion amount in 2025: $13,990,000

When money changes hands, it is often taxed. Why should inheritances be an exception?

Excessive concentration of wealth has consistently been proven to cause grave societal problems throughout human history, often resulting in revolutions.

Wasn't there no estate tax in 2010 as the 2009 Congress adjourned before it expired?

 

[pb4uski]

Correct, and I'm guessing there is a point in there somewhere other than Congress is stupid but the point is a bit of a mystery.

 

[AudiDudi]

Correct, and I'm guessing there is a point in there somewhere other than Congress is stupid but the point is a bit of a mystery.

Are we getting into politics now?

 

[Montecfo]

The estate tax is only levied on the part of an estate that's in excess of the absurdly high current exclusion, nearly $14 million. The exclusion amount has increased in recent decades far in excess of the rate of inflation. Furthermore, loopholes allow many exceedingly wealthy folks to avoid inheritance taxes.

US Federal Estate Exclusion Amounts in Recent Years:
Estate exclusion amount in 1981: $175,000
Estate exclusion amount in 2001: $675,000
Estate exclusion amount in 2002: $1,000,000
Estate exclusion amount in 2006: $2,000,000
Estate exclusion amount in 2011: $5,000,000
Estate exclusion amount in 2017: $5,490,000
Estate exclusion amount in 2018: $11,180,000
Estate exclusion amount in 2025: $13,990,000

What you are documenting here is what has become a consensus view over the last 50 years or so that death should not be a taxable event for most people.

When money changes hands, it is often taxed. Why should inheritances be an exception?

And in the view of some, when it doesn't change hands. Taxing unrealized appreciation of assets has been proposed legislatively and discussed here.

And your view suggests that anytime money changes hands the tax man should get a slice. Fortunately that is not a view widely shared. The is no federal sales tax or value added tax thank goodness. Government is not short on excuses for taxing its citizens.

But inheritance is not an exception. You just listed the thresholds and discussed the rates.

Excessive concentration of wealth has consistently been proven to cause grave societal problems throughout human history, often resulting in revolutions.

Excessive appears to be in the eye of the beholder. But I think your statement is more accurate in societies with a large upper class a large lower class and little in between. Tha the certainly does not describe the US.

Instead this remains a land of immense opportunity.

Notice how some 80% of millionaires are self made. But it doesn't stop there. Many of the most wealthy Americans, yes, billionaires like Gates, Zuckerberg, Buffet, Musk, Cuban and many many others built wealth through ideas and risk taking, not inheritance. In fact if you go through lists like the Forbes 400 most of those represented are self made.

Or somehow the wealthy of prior generations have not found "loopholes" sufficient to keep them at the top for generation after generation.

So in an economy dynamic enough for that to be true, you see the seeds of revolution? I do not see that at all.

 

[Koolau]

If one wants to close a crazy loophole are they a tax collector or just trying to correct a crazy loophole? The federal government should not be making and retaining loopholes that benefit the wealthy just because it can.

I understand that the historical reason for stepped up basis was that it was the quid quo pro for the estate tax (not really the inheritance tax as you stated). I would concede that it made sense back when the estate tax exemption was lower. As early as 2000 the exemption was only $675,000 and if it wasn't currently almost $14 million (almost $28 million for a couple) then I probably wouldn't feel so strongly about it.

I generally agree that the family farm or business shouldn't have to be sold just to pay the estate tax, but there are ways to deal with that through permanent life insurance on the principal owners that provide the funds to pay the estate tax and that was done for years when the estate tax exemption was lower/more reasonable. Also, you may have missed in the post that you responded to that I suggested that the tax on the unrealized gains could be made payable over 5 or 10 years. That was suggested specifically so the family farm or business would not need to be sold to pay the estate taxes.

However it make no sense to me that if someone inherits a $2 million traditional IRA that they need to drain it over 10 years and pay the tax on the withdrawals but OTOH if someone inherits a family farm or business with a $2 million unrealized gain that not only does the estate generally not pay estate tax but also they never have to pay tax on that unrealized gain at all.

IMO, it is an obscene inequity in the tax law that does nothing but to benefit the wealthy and should be closed. There will need to be an independent appraisal to set the stepped up basis of the family farm or business under current law and that same independent appraisal can be used to set the value of the family farm or business. The basis will be known from the business' capital asset and depreciation records.

I guess my whole issue with this argument is that 1) you haven't defined "wealthy" though you have suggested gummint shouldn't favor them and 2) Gummint may have a reason to protect at least some generational wealth because existing businesses tend to be good for the economy. After all, they have proven themselves by making a chunk of money with their business.

I'll add one more thing 3) most of those inheriting businesses can handle the money better than gummint can handle the money they might otherwise bring in when sold. It's not about rich people spending lavishly after windfall inheritance, it's about normal people carrying on a going business uninterrupted after the owner passes on.

Heh, heh, by the way, my definition of "wealthy"? Most of the people on this forum! If you disagree, I'd like to hear what you believe wealthy is.

Just in case this all comes out as sounding harsh, it's not intended that way. I respect your opinion. I'm sure there's a point where a loophole is just a loophole and not a means to an end.